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Paris, September 13, 2007 - Alcatel-Lucent (Euronext Paris and NYSE:
ALU) today revised its full year 2007 revenue outlook and confirmed its
previous statements regarding synergy targets for the year.
Alcatel-Lucent now expects its full year 2007 revenue growth to be flat to
slightly up at a constant Euro/USD exchange rate1.
Alcatel-Lucent had previously estimated that its revenue would grow in the mid
single digits at a constant rate. As of today, Alcatel-Lucent’s revenue
for the third quarter 2007 is estimated to grow slightly compared to the second
quarter 2007 at a constant Euro/USD exchange rate. The company’s revenue for
the fourth quarter 2007 is still expected to ramp-up strongly over the third
quarter 2007. Additionally, the change in revenue mix is expected to
negatively impact the profitability of the company, especially in the current
quarter. For the third quarter 2007, the operating income (loss)2 is
expected to be around breakeven.
This downward revision in the revenue forecast is based on the most recent
and updated discussions with some wireless customers in North America.
Alcatel-Lucent is now seeing a change in capital spending with those customers
in 2007, compared to what it had anticipated. As a result, the company is
not seeing the projected volume changes that would have mitigated the ongoing
pricing pressures it is experiencing. In other regions and businesses, in
particular wireline, enterprise and Asia-Pacific revenue performance
continues to be strong.
The company continues to execute on its integration plans and is
planning to achieve its synergy related pre-tax savings of Euro 600 million
this year. As the company has previously said for this year, it will not
retain its gross margin savings due to competitive market conditions but
expects it will retain most of its operating expense savings on a comparable
basis3.
Alcatel-Lucent continues to expect a strong sequential revenue growth in the
fourth quarter, driven by IP transformation, broadband deployment and
associated services.
Patricia Russo, Alcatel-Lucent CEO said, “Given ongoing dynamics in the
rapidly changing telecom industry, the company is taking steps to accelerate
the execution of its current restructuring program and to implement additional
focused cost reduction plans in markets which require further actions to be
taken.
While the company acknowledges that it is competing in a challenging market
environment and executing a complex merger, it remains confident that it has
the right combination of people and assets to position the company as a
leading player in the industry.”
Alcatel-Lucent will provide an update regarding its plans when announcing
third quarter earnings on October 31, 2007.
1 - Compared to 2006 pro-forma revenue
2 - Income (loss) from operating activities before restructuring costs,
impairment of intangible assets and gain (loss) on disposal of consolidated
entities, excluding impacts of Lucent's purchase price allocation
3 - Adjusted for the Nortel UMTS and Riverstone
acquisitions, Euro/USD exchange rate, R&D capitalization &
one-offs.
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS
Except for historical information, all other information in this press
release consists of forward-looking statements within the meaning of the US
Private Securities Litigation Reform Act of 1995, as amended. These forward
looking statements include statements regarding the future financial and
operating results of Alcatel-Lucent such as (i) the expected revenue growth for
the third and fourth quarters of 2007 and full year 2007 based on constant
Euro/USD exchange rates, (ii) the negative impact of the change in revenue mix
on profitability, (ii) projected breakeven operating income (loss) for the
third quarter 2007, (iv) performance projections in regions outside North
America and in businesses other than wireless, (v) our anticipated merger
synergies in 2007 and (vi) our expected operating expense savings for
2007. Words such as "expects," "anticipates,"
"targets," "projects," "intends," "plans,"
"believes," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements which are
not statements of historical facts. These forward-looking statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to assess. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking statements. These risks and uncertainties are based upon a
number of important factors including, among others: our ability to operate
effectively in a highly competitive industry with many participants; our
ability to keep pace with technological advances and correctly identify and
invest in the technologies that become commercially accepted; difficulties and
delays in achieving synergies and cost savings; fluctuations in the
telecommunications market; exposure to the pricing pressures in the regions in
which we sell; the pricing, cost and other risks inherent in long-term sales
agreements; exposure to the credit risk of customers; reliance on a limited
number of contract manufacturers to supply products we sell; the social,
political and economic risks of our global operations; the costs and risks
associated with pension and postretirement benefit obligations; the complexity
of products sold; changes to existing regulations or technical standards;
existing and future litigation; difficulties and costs in protecting
intellectual property rights and exposure to infringement claims by others;
compliance with environmental, health and safety laws; whether
Alcatel-Lucent can continue to obtain product cost improvements and to
implement cost cutting and restructuring programs and whether these efforts
will achieve their expected benefits, including improvements in operating
income (loss), among other benefits; the economic situation in general
(including exchange rate fluctuations) and uncertainties in Alcatel-Lucent’s
customers’ businesses in particular; customer demand for Alcatel-Lucent’s
products and services; control of costs and expenses; international growth;
conditions and growth rates in the telecommunications industry; and the impact
of each of these factors on sales and income. For a more complete list and
description of such risks and uncertainties, refer to Alcatel-Lucent's Form
20-F for the year ended December 31, 2006, as well as other filings by
Alcatel-Lucent with the US Securities and Exchange Commission. Except as
required under the US federal securities laws and the rules and regulations of
the US Securities and Exchange Commission, Alcatel-Lucent disclaims any
intention or obligation to update any forward-looking statements after the
distribution of this news release, whether as a result of new information,
future events, developments, changes in assumptions or otherwise.
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